Americans across the 50 states are in agreement on one point: Gasoline
prices are too high.

Gas prices recently hit an all-time high of an average $1.57 per gallon
nationally.1 But Americans do have one thing to be grateful for: Over the
past four decades at least, gasoline prices haven't risen as much as U.S.
postage.2

Back in 1962, the price of a first-class stamp was four cents. Today,
it is 33 cents, and the U.S. Postal Service has asked the Postal Rate Commission
to raise the price by another penny.

What's worse, over a hundred million Americans could be hit even harder
by a hidden postage rate increase three to five times higher than the three
percent increase the Post Office is seeking for first-class mail. That's
because the Postal Service has officially asked the Postal Rate Commission
to increase postage rates for delivery of magazines and newspapers by ten
to 15 percent.3

The 166 million Americans who subscribe to magazines4 will be hit hardest
by this. They'll have to eat these costs in the form of inevitable subscription
rate increases. If they don't, and in some cases they won't, some of the
nation's up to 18,000 magazines5 will simply go out of business.

Magazine publishing is a notoriously difficult industry. Publishers of
new titles can expect to operate at a loss for the first year,6 and often
for many years. Make no mistake: A price increase of this magnitude will
cut down on magazine options for consumers, and put some Americans in the
publishing industry out of work.

Newspapers, particularly rural ones that rely disproportionately on mail
for delivery, will also be particularly hard-hit if the proposed price increase
for newspaper postage is approved when the Postal Rate Commission meets
this November.

What is of particular concern to fans of periodicals is that a price
increase up to 15 percent isn't necessary. Even Postmaster General William
Henderson agrees it is not.

Why, then, has such a draconian postal rate increase - three times the
inflation rate - been proposed by the Postal Service?

Some background is in order. According to law, the Post Office must charge
rates for each class of mail - such as first-class, magazines, books, newspapers
and non-profit bulk - that are sufficient to cover the Postal Service's
costs in delivering that class of mail.

Throughout 1998 and 1999, a joint two-year U.S. Postal Service/Magazine
Publishers of America task force identified ways to cut the Post Office's
costs in delivering magazines by approximately $150 million.

If the Post Office adopted these measures, the postal rate increase needed
to cover costs for magazine delivery would only have to be 7.5 percent,
not 15 percent. For the many periodicals struggling with profitability,
and the many seniors on fixed incomes who subscribe to periodicals who may
not have the option of reading magazines via the Internet, this is a major
price difference.

Postmaster General Henderson has indicated that he agrees, in general,
with this assessment. In a speech last October to the Magazine Publishers
of America, Henderson said that magazine postage rate increases could be
kept below ten percent, in part because of identified cost savings.

Nevertheless, on January 12, 2000, the U.S. Postal Service asked the
Postal Rate Commission to formally approve up to a 15 percent rate increase
in magazine postage. The potential cost savings identified by the task force
simply weren't taken into account.

Why not? One theory is that Postal Service management simply hasn't gotten
around to it. Magazine publishers have asked why not, only to be told that
Postal Service management does intend to address the issue before the Postal
Rate Commission meets in November.

But with the very survival of some publications in jeopardy if the 15
percent price increase is approved, and circulation numbers at risk for
all publications, publishers are worried. Some wonder why the Postal Service
management didn't consider the cost savings issue before proposing such
a sharp postage rate increase in January, especially since the Postmaster
General publicly approved of the notion as early as October.

The Post Office has every incentive to keep postage prices for books,
newspapers and magazines low. The Internet and other emerging technologies
are proving to be a formidable competitor for the Post Office. So much so,
in fact, that postal officials are predicting that, despite the growing
economy and our growing population, the volume of first-class mail will
decline in 2003 and every year thereafter.7 So it is in the Postal Service's
interest to make certain publishers aren't driven out of business or even
suffer lower circulation rates. The Post Office needs this business, and
doesn't want traditional publishers to start looking for alternative delivery
methods.

In other words, if the Post Office is allowed to adopt rate increases
that drive out publishers of traditional media - postal customers the postmaster
general has reportedly called the "anchor" of the mail system,8
the result could be not only the death of all but the most profitable of
traditional mail-delivered media, but a more widespread long term death
spiral that eventually envelops the Postal Service itself.

No one argues that the Postal Service should not charge publishers every
penny it needs to recover costs of delivery. But it shouldn't charge a penny
more.

Books, magazines and newspapers serve and important civic and educational
function in our society. It is in everyone's interest if they survive.

In a December 1999 survey, a survey of seniors at 55 top colleges and
universities found that only a little more than half knew general information
about democracy and the U.S. Constitution.9

These kids are voters, or soon could be. Clearly, many could benefit
from more exposure to magazines, newspapers and books. The Postal Service
should take this into account and request only what it needs - a single-digit
rate increase - for delivery of periodicals. If it doesn't, the Postal Rate
Commission should refuse to approve any double-digit price hike.

2 The 33-cent price of a first class stamp in 2000 is 8.25
times higher than the four-cent price of a first-class stamp in 1962. The
average $1.57 price of a gallon of gasoline in March 2000 (see footnote
1), including taxes, is 5.06 times higher than the 31-cent average price
of a gallon of gasoline in 1962. Source for the average price of gasoline
in 1962 is the American Petroleum Institute, Washington, D.C.

3 U.S. Postal Service R2000-1, "Omnibus Rate Case
Proposal," which states that requested postal rate increases for larger
commercial customers, if granted by the Postal Rate Commission, would range
from 12 percent to 15 percent and by ten percent to 15 percent for smaller
commercial customers. According to Magazine Publishers of America fact sheets,
the price increase for magazines alone would be 15 percent.

6 "The Surviving Small Press: Starting a Magazine,"
reprinted from Laughing Bear Newsletter #110, copyright 1999, Laughing Bear
Press, available on the Internet at http://www.laughingbear.com/magazine.html.